Brazil in January 2026: the most important developments in economy
Brazil's economy in January 2026 was dominated by the trade agreement between the European Union and the Mercosur bloc of South American countries. On 7 January Italy's Agriculture Minister said Italy was ready to sign, and the EU offered farmers 45 billion euros in early funding. On 9 January EU member states formally approved the agreement, ending 25 years of negotiation; five member states, including France, opposed it. French farmers drove tractors to encircle Paris in protest over income and trade deals, and the French parliament rejected censure motions against the government over the deal. The agreement was signed on 17 January in Paraguay, attended by Argentina's President Javier Milei while Brazil's President Lula did not attend. It aims to remove most tariffs between two economic zones representing about 750 million people. Poland announced it would file a lawsuit against Mercosur. On 21 January the European Parliament voted to delay approval and referred the pact to the European Court of Justice, freezing its progress. On 22 January an EU diplomat said the agreement is likely to take effect provisionally from March.
In domestic policy, Lula signed laws implementing a major tax reform and authorising retroactive pay for public servants, and vetoed a tax cut for football clubs that was included in the reform law. He called for an increase in the national minimum wage. Brazil's central bank liquidated Banco Master's Will bank, and Mastercard suspended its cards, while Banco Inter received approval from the US Federal Reserve to open a branch in the United States. Brazilian prosecutors demanded answers from Petrobras over a fluid leak that halted drilling at the mouth of the Amazon River.
On external economic ties, trade between Brazil and China reached a record high last year, roughly double the value of trade with the United States. Brazil and the United States were exploring a possible deal on rare earth minerals. A US senator said President Donald Trump supports a bill to sanction China, India and Brazil over their imports of Russian oil. Venezuela's debt to Brazil rose by $312 million under Lula's administration.
by WorldBrief & Maksim Micheliov | AI-generated summary
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